State auditor pans Puget Sound agency

Washington state auditors say the agency charged with cleaning up Puget Sound should clean up its own act too. A report out Wednesday says the Puget Sound Partnership has misspent public funds and circumvented various state laws. John Ryan has the story.

Governor Chris Gregoire created the Partnership in 2007 to jump-start the stalled clean-up of Puget Sound. Since then, Partnership officials have said that their effort to save the sound is different from earlier ones because it's more accountable. The Partnership is the first clean-up agency with a deadline. It has a legal mandate to restore the health of Puget Sound by the year 2020.

Once the Partnership emerges from its three-year-long planning process, it will work to channel money toward local, state, and other agencies to prevent pollution and restore habitat in Puget Sound.

Executive director David Dicks told a U.S. Senate hearing in January that the Partnership will hold those agencies accountable for reaching that goal.

Dicks: "We are in the process of building, hopefully, what we're hoping is to be, a best-in-class accountability and performance management system. We need to be able to account for the money that's being spent to make sure the people signing up to do a project actually do it.

But the Washington State Auditor's Office says the Partnership has done a poor job of accounting for its own spending.

A new audit report covering the agency's first two years says the Partnership awarded contracts illegally, and bought equipment and gifts in violation of state law. Those purchases included $12,000 of monogrammed jackets and fleece vests, and personalized mahogany gift boxes containing bottles of sparkling apple cider. The auditors say documentation of who received those gifts is vague.

The auditors also criticized the agency for purchasing the clothing and 5,000 tubes of promotional lip balm without going through competitive processes to make the best use of taxpayers' dollars.Emily Johnson was in charge of the audit for the state auditor's office.Johnson: "From their inception up until the date that we had finished the audit, there was just really no indication that they had ever made following state rules and regulations a priority."

Ryan: "I'm guessing that's not something that the auditor's office says very often about agencies it looks into."

Johnson: "No, it is not something we say very often. It is alarming and surprising. And as an auditor, in a way, you're used to finding things like this. You're just not used to finding this many things. "

The auditors singled out two sole-source contracts. One of them went to the K & L Gates law firm to help set up a nonprofit Foundation for Puget Sound. State agencies are required to use the attorney general's office for all their legal business. Beyond that, the contract amount raised the auditor's suspicions.

Johnson: "To find a contract that is set and filed with the Office of Financial Management for $19,999, without any sort of documentation to show how they established that budget, how they came to that figure, that is something that you definitely need to look closer at. The threshold for being required to advertise a sole source contract, is $20,000."

In other words, one dollar more, and the contract would have to be awarded competitively. State law forbids agencies from structuring contracts to get around those requirements. The Partnership ended up adding more work to the unadvertised contract, eventually paying the law firm $51,000.

David Dicks was flying to Washington, D.C., on Wednesday and could not be reached for comment. Jim Cahill is the Partnership's director of accountability and budget. He says the agency agrees with the auditor's findings and has been working to address the problems identified in the report.

Cahill: "We should have gone out for more informal competition, but we didn't, and I don't think there was any intent to evade the law."

Cahill says the agency was focused in its first two years on producing its action plan for Puget Sound on a tight deadline.

Cahill: "We also had many folks new to state government that were in the agency, and so they weren't necessarily familiar with all the requirements."

During its first two years, the Partnership spent half its $13 million dollar budget on consultants.

The audit says the Partnership did not award work to consultants fairly. The agency often kept giving more work to the same consultants, leaving other pre-screened consultants out in the cold.

The firm EnviroIssues handled much of the effort to get public input on saving the sound. The Partnership increased the Seattle firm's original $400,000 contract by another $1,000,000, without letting other qualified firms compete for the work.

Contracts obtained by KUOW show the consultants billing the Partnership up to $300 an hour for the public-outreach work. Jim Cahill says the Partnership has discontinued that contracting system and is relying much less on consultants now.

KUOW has also learned that the Partnership spent more freely on its staff than other agencies did. Its average annual salary last year was $20,000 more than at the state's other natural-resource agencies—$75,000 a year at the Partnership versus $53,000 at the others.

Jim Cahill says the relatively small staff of the Partnership has a higher level of responsibility than at some larger agencies.

But in inflation-adjusted dollars, Partnership salaries were about $16,000 a year more than they were at the similarly sized Puget Sound Action Team. That agency was disbanded and replaced by the Partnership in 2007.

A spokesman for Governor Gregoire said the governor had not yet had time to review the auditor's report. I'm John Ryan, reporting in Seattle.